By: Mark Glennon*
“The Cost of Gridlock” is Crain’s headline about a recent University of Illinois Study that quantified Illinois’ higher borrowing cost.
The study said no such thing. It compared recent Illinois borrowing cost to those in 2006. Illinois paid a penalty of about $53 million on its recent $513 million bond offering, the study says, if you compare its pricing to 2006 Illinois bonds.
Fair enough. Let’s assume that’s right.
It certainly does not say that’s the price of gridlock. Many bad things happened since 2006 that hurt Illinois’ borrowing costs, beyond the gridlock:
- We had something called The Great Recession that Crain’s seems to have forgotten about that crushed parts of that state that never recovered.
- The state’s unfunded pension liability was about $40 billion in 2006. Today, it’s officially $111 billion, plus another $50 billion or so added recently in healthcare costs, assuming phony, optimistic government numbers.
- Blago splattered across national headlines.
- Hundreds of millions in pork spending were pissed away under Pat Quinn.
- Taxpayers coughed up for a “temporary” tax increase that solved nothing.
- Rahm proved out to be a can-kicking denier, dooming Chicago into inevitable bankruptcy.
The list goes on on. Sure, maybe gridlock, too, has scared off bond buyers. They love higher taxes, and ending gridlock means raising taxes for Crain’s. Borrowing costs derive only from chances of payment default for bondholders. But for others, maybe the headline should have been, “Gridlock Ten Years Ago Might Helped Helped Us.”
This kind of crap from Crain’s is an old story, as we’ve often pointed out. They are a part of our problem.
*Mark Glennon is founder of WirePoints. Opinions expressed are his own.